The Zhitong Finance App learned that Xunqing Settlement Company will establish a digital asset platform within this year to provide one-stop services such as digital bond issuance and settlement. Yu Weiwen, Chief Executive of the Hong Kong Monetary Authority, said that the digital asset platform will be put into operation by the end of this year. The platform will reflect the vision of 24-hour on-chain atomized settlement, thereby improving flexibility and efficiency. The authorities will also explore accepting tokenized deposits and regulated stablecoins for settlement on the platform to further strengthen Hong Kong's leading position in the global digital finance sector.
24-hour on-chain atomized settlement uses blockchain technology to break traditional business time limits, and allows global buyers and sellers to achieve “simultaneous exchange of funds and assets with zero risk of default” through smart contracts at any time within 24 hours.
On September 23, Yu Weiwen, who is also the honorary chairman of the Treasury Markets Association, said in a speech at the Treasury Markets Summit that the digital asset platform will support e-HKD settlement using the Hong Kong Central Bank's digital currency, and will also explore accepting tokenized deposits and regulated stablecoins for settlement on the platform.
He reiterated that the HKMA will test the tokenization of Exchange Fund notes and that the measures will help the banking industry manage assets and liabilities more efficiently.
Yu Weiwen said that Hong Kong's leading position in digital finance will enable innovative solutions for issuing and investing in fixed income assets. This will translate into higher transaction efficiency, transparency and accessibility, and benefit those practitioners that can adopt and integrate these technologies more effectively than others. The HKMA's vision is to create a “diversified market” with broad participation, a “deep market” with abundant liquidity, and a “dynamic native digital market” with future-oriented infrastructure.
In addition, Yu Weiwen mentioned that the compound annual growth rate of the Hong Kong bond market has reached 20% in the past 20 years. Last year, about a quarter of Asia's international bond issuance was carried out in Hong Kong. The strong growth mainly came from Dim Sum bonds. As the financial situation of the Hong Kong dollar became more favorable, there was also a significant increase in Hong Kong dollar-denominated cloud bonds. In the first half of the year, the number of cloud bonds issued by global institutions increased 64% year over year.
Yu Weiwen pointed out that the HKMA has been promoting it all over the world to attract more issuers and investors to participate in the Hong Kong market. To develop a diversified, deep and dynamic, digital-native bond market, the HKMA is cultivating a healthy ecosystem and playing an exemplary role through the issuance of bonds by the government. In addition to issuing multi-currency bonds and expanding the scale of issuance, it is also extending the term of offshore RMB and Hong Kong dollar bonds issued by the government to provide a long-term reference for yield curves and promote private sector bond issuance.
Yu Weiwen said that the average daily foreign exchange transactions in Hong Kong in April this year increased by about 20% compared to October last year. The performance of RMB instant payment settlement and trade settlement was active, and RMB loans increased by nearly 30%. He said that the Treasury Markets Association is discussing the establishment of a seven-day offshore RMB liquidity bidding mechanism, and the HKMA is also planning to issue offshore RMB short-term debt instruments to provide more liquidity management products and strengthen the offshore RMB yield curve.